Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Investor Presentation (March 2018)
32 slides from Braemar Hotels & Resorts's investor presentation, Mar 14, 2018
Slide 1: March 2018
March 2018 ZS ASHFORD HOSPITALITY PRIME
Slide 2: Forward Looking Statements and Non-GAAP Measures
Company Presentation // March 2018 Forward Looking Statements and Non-GAAP Measures 2 In keeping with the SEC's "Safe Harbor" guidelines, certain statements made during this presentation could be considered forward-looking and subject to certain risks and uncertainties that could cause results to di
Slide 3: Management Team
Company Presentation // March 2018 Management Team 3 20 years of hospitality experience 1 year with Ashford 15 years with Morgan Stanley Cornell School of Hotel Administration, BS University of Pennsylvania MBA RICHARD J. STOCKTON Chief Executive Officer & President 18 years of hospitali
Slide 4: Strategic Overview
Company Presentation // March 2018 Strategic Overview 4 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL The Ritz-Carlton St. Thomas St. Thomas, USVI Focused strategy of investing in luxury hotels and resorts Grow organically through strong revenue and cost control initiatives Gr
Slide 5: 2017 Q4 and Full Year Hotel Operating Results
Company Presentation // March 2018 2017 Q4 and Full Year Hotel Operating Results 5 Comparable Operating Results(1) Q4 2017 2016 % Variance ADR $ 243.78 $ 257.29 (5.25)% REVPAR $ 188.15 207.27 (9.22)% Occupancy 77.18% 80.56% (4.20)% Revenues $ 89,572 $ 98,900 (9.43)% Hotel EBITDA $ 27,092 $ 26,961 0.
Slide 6: Q4 Earnings Highlights
Company Presentation // March 2018 Q4 Earnings Highlights 6 • Adjusted EBITDA was $22.0mm for the quarter, compared with $21.6mm for the prior year quarter • Comparable RevPAR for all hotels that did not incur business interruption claims decreased 1.1% • Adjusted funds from operations (AFFO) was $0
Slide 7: Business Interruption Recoveries
Company Presentation // March 2018 Business Interruption Recoveries 7 Note: (1) Expected to Reopen 11/1/19. BI claims can be submitted for 18 months after reopening (2) Expected BI Recoveries for Q1 2018 PIER HOUSE RESORT RITZ-CARLTON ST. THOMAS(1) HOTEL YOUNTVILLE BARDESSONO Properties Affected HUR
Slide 8: Recent Developments
Company Presentation // March 2018 Recent Developments 8 Meets Defined Strategy Luxury Chainscale Segment Increases portfolio RevPAR by $5 Replaces critically needed EBITDA Attractive Financial returns No need to raise equity Property Financial Overview Hotel Net Operating Income of $10.
Slide 9: Portfolio Overview
Company Presentation // March 2018 Portfolio Overview 9 Rooms: 3,547(1) Hotels: 12(1) Gross Assets: $1.7B(1) Brand(1),(2) Chain Scale(1),(2) (1) Includes pro forma data for Ritz-Carlton Sarasota, and excludes Renaissance Tampa (2) Portfolio by Hotel EBITDA as of December 31, 2017 Upscale, 19% Upper
Slide 10: High-Quality Hotels in Leading Urban & Resort Markets
Company Presentation // March 2018 High-Quality Hotels in Leading Urban & Resort Markets 10 Non-Core Assets Marriott Seattle Seattle, WA Hilton Torrey Pines La Jolla, CA Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL Renaissance Tampa Tampa, FL Sofitel Chicago Magnificent Mile
Slide 11: Portfolio Detail
Company Presentation // March 2018 • Core portfolio quality unparalleled in the public lodging REIT sector • Geographically diversified portfolio located in strong markets Portfolio Detail 11 (1) Pro Forma TTM as of December 31, 2017 (2) Announced repositioning to Autograph Collection by Marriott No
Slide 12: Why We Focus on Luxury
Company Presentation // March 2018 Why We Focus on Luxury 12 (1) Total nominal growth from December 1987 to December 2017 Source: STR Greatest long-term RevPAR growth of 256%(1) LUXURY Second greatest long- term RevPAR growth of 155%(1) UPPER-UPSCALE R e v PAR ( In d exe d ) 50 100 150 200 250 300 3
Slide 13: Long-Term Trading Premium
Company Presentation // March 2018 Long-Term Trading Premium 13 Source: STR, SNL Top Quartile: BEE, PEB, LHO Peers: AHT, CLDT, CHSP, DRH, FCH, HT, HPT, HST, INN, RLJ, SHO The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and traded at a premium relative to oth
Slide 14: Highly Aligned Management Team
Company Presentation // March 2018 Highly Aligned Management Team 14 Management has significant personal wealth invested in the Company REIT Avg includes: AHT, HT, APLE, CLDT, CHSP, RLJ, PEB, INN, HST, DRH, SHO, XHR, LHO, PK Source: Company filings * Insider equity ownership for Ashford Prime includ
Slide 15: Asset Management Overview
Company Presentation // March 2018 Asset Management Overview 15 Senior Oversight 1 – COO 8 – Asset managers 2 – Legal + 1 – Director of Underwriting + 1 – Analyst + 2 – Revenue Optimization + 1 – Analyst + 4 – Capex Specialists + 1 – Property Tax specialist + 1 – Analyst + 3 – Risk & Insurance + 1 –
Slide 16: Past Operating Performance Relative to Peers
Company Presentation // March 2018 Past Operating Performance Relative to Peers 16 RevPAR Growth 7.3% 4.2% Hotel EBITDA Growth 8.5% 8.3% -2.5% -0.2% 0.2% -2.3% 2015 2.4% 1.7% 3.7% 2.5% 2016 2017 Note: Comparable Results. Peers include CHSP, PEB, DRH, LHO, and SHO. • Prime has outperformed its REIT p
Slide 17: External Growth – Luxury Markets
Company Presentation // March 2018 External Growth – Luxury Markets 17 TOP 15 LUXURY MARKETS BY ROOMS(1) (1) Based on information provided by STR for luxury class as of May 2017 Market Hotels Rooms Las Vegas 18 26,273 New York 71 17,288 Miami 51 13,132 Los Angeles 53 11,340 Hawaii 28 8,398 Chicago 4
Slide 18: Target Market Analysis
Company Presentation // March 2018 Target Market Analysis(1) 18 (1) Based on internal analysis Market Size Fundamentals Pricing Desirability 0 10 20 30 40 50 60 Fundamentals Market Size Pricing
Slide 19: Acquisition Strategy
Company Presentation // March 2018 Acquisition Strategy 19 Hotel EBITDA Margins - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 2015 2016 2017 ($ i n t h o u sa n ds ) Capex 130 bps 175 bps AVG NOI YIELD GROWTH: Acquisition Portfolio(2),(3),(4) AVG NOI YIELD GROWTH: Acquire Lu
Slide 20: Case Study – The Ritz-Carlton St. Thomas
Company Presentation // March 2018 Case Study – The Ritz-Carlton St. Thomas 20 2016 (1st Full Year of Ownership) 450 83% RPI INCREASE (BPS) HOTEL EBITDA FLOW-THROUGH Acquired in December 2015 from Marriott for $64mm Going-in TTM NOI cap rate of 10% Performance was strong due to BI recoveries in Q4 T
Slide 21: Case Study – Pier House Resort
Company Presentation // March 2018 Case Study – Pier House Resort 21 • Ashford Prime purchased the asset in early 2014 for $92.7mm • Remington had recently taken over property management & has a proven ability to deliver superior results 2015 2.5% 255 86% RPI GROWTH HOTEL EBITDA MARGIN INCREASE (BPS
Slide 22: Case Study – Bardessono Hotel & Spa
Company Presentation // March 2018 Case Study – Bardessono Hotel & Spa 22 • Purchased for $85 million unencumbered by management. Installed Remington as property manager • Initial TTM cap rate was 4.6%, current yield on cost is 7.4%* 2016 (First Full Year of Ownership) 9.7% 518 242% REVPAR GROWTH HO
Slide 23: Conservative Capital Structure
Company Presentation // March 2018 Conservative Capital Structure(1) 23 45% TARGET LEVERAGE Net Debt Gross Assets (1) As of December 31, 2017 Non-recourse debt lowers risk profile of the platform OVERVIEW Floating-rate debt provides a natural hedge to hotel cash flows Maximizes flexibility in all ec
Slide 24: Cash Management Strategy
Company Presentation // March 2018 Cash Management Strategy 24 (1) As of December 31, 2017 (2) At market value as of 3/6/2018 NET WORKING CAPITAL(1) 10-15% CASH TO GROSS DEBT TARGET 17% CURRENT CASH TO GROSS DEBT(1) Defend our assets at financing maturity BENEFITS Hilton Torrey Pines La Jolla, CA $4
Slide 25: Value-Add Refinancings, Interest Rate Improvement, Cash Flow and Dividends
Company Presentation // March 2018 Value-Add Refinancings Long-Term Interest Rate Improvement Cash Flow and Dividends 25 (1) As of December 31, 2017 (2) GAAP reconciliation in appendix $12mm 3-PACK REFI - JAN 2017 $45mm CAD(1),(2),(3) 4.3% 2017 Expected Cash Flow Savings $1mm BARDESSONO REFI - AUG 2
Slide 26: Laddered debt maturities
Company Presentation // March 2018 Laddered debt maturities Debt Maturities 26 2019 NEXT HARD DEBT MATURITY 2.1x FCCR OVERVIEW(1) (1) As of December 31, 2017 (2) Adjusted for sale of the Marriott Plano Legacy Note: Excludes an $8.1mm TIF note maturing in 2018 Courtyard Philadelphia Philadelphia, PA
Slide 27: Valuation Opportunity
Company Presentation // March 2018 AHP SHO DRH CHSP LHO PEB Valuation Opportunity 27 (1) As reported by company earnings releases (2) Pro forma for acquisitions of Park Hyatt Beaver Creek and Hotel Yountville and sale of Marriott Plano Legacy TEV / 2018E EBITDA MULTIPLE(3),(4) PRICE / 2018E AFFO / S
Slide 28: Ashford Prime Portfolio Implied Value
Company Presentation // March 2018 ASHFORD PRIME PORTFOLIO *(ADJUSTED FOR SALE OF MARRIOTT PLANO) (mms) Low-End High-End TTM NOI*(5) $100.8 $100.8 Cap Rate(6) 8.0% 6.5% Implied Value $1,261 $1,551 NWC*(7),(8) $162 $162 Preferred Equity(7) ($124) ($124) Debt*(7) ($779) ($779) Implied Equity Mkt Cap $
Slide 29: Key Takeaways
Company Presentation // March 2018 Key Takeaways 29 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL The Ritz-Carlton St. Thomas St. Thomas, USVI Highest Quality Portfolio Amongst All Lodging REITs…In The Segment With Greatest Growth Trajectory Growing Organically: Rigorous Asset
Slide 30: Appendix
Appendix
Slide 31: Reconciliation of Net Income (Loss) to Hotel NOI
Company Presentation // March 2018 Reconciliation of Net Income (Loss) to Hotel NOI 31 Year Ended December 31, 2017 Net income (loss) 82,469$ (Income) loss from consolidated entities attributable to noncontrolling interest (5,176) Net (income) loss attributable to redeemable noncontrolling interests
Slide 32: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Company Presentation // March 2018 Reconciliation of Net Income (Loss) to Cash Available for Distribution 32 Year Ended December 31, 2017 Net income (loss) 28,324$ (Income) loss from consolidated entities attributable to noncontrolling interest (3,264) Net (income) loss attributable to redeemable no
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